South Africa’s telecoms regulator, ICASA, has awarded its second licence for DVB-H mobile TV broadcasting to MultiChoice. Multichoice and e.tv, the first licensee, will share a DVB-H multiplex and have 12 months to launch services. At the same time, South Africa is reconsidering whether it should adopt Japan and Brazil’s ISDB-T instead of pursuing the deployment of DVB-T. Meanwhile, the Brazilians are conducting tests to prove that the ISDB-T standard can be deployed in the 8MHz bands currently used throughout the African continent.

The lack of definition regarding the DTT standard at the same time that DVB-H licences are being awarded raises questions about the potential profitability of future mobile TV players:  will a DVB-H network be built in the next 12 months only to compete with potential free-to-air 1-seg broadcasts?

As it stands, 41 African countries could still opt for ISDB-T, influenced by South Africa’s decision, corresponding to approximately 1.4 billion people. This would significantly add to the current ISDB-T market, which is currently limited to Latin America and Japan and covers 580 million people (click on diagram below).

The conflicting signs given by the government of South Africa are symptomatic of widespread confusion in the continent: the debate over transmission standards has been plagued by misinformation, and governments are mixing the attributes of each standard with the benefits of particular network configurations, compression and interactive middleware choices.

Farncombe believes that countries choosing a transmission standard should focus on maximising the economic benefit of DSO transition, and carefully analyse the following issues:

• Price of set-top-boxes: Although prices tend to decrease with time, there are still significant differences between technologies. This might have a strong impact on the duration of simulcasting, and force governments to implement wider subsidy schemes, and must be carefully analysed against the risk of creating a legacy base of set-top-boxes.
• Incentives from standards’ proponents: Benefits offered by countries interested in expanding the reach of their technologies may prove persuasive.
• Overall long-term objectives: If one of the overarching objectives for DTT migration is to enable interactivity, then interactive functionality must be mandated; otherwise it will be ignored by the vast majority of manufacturers.

The French regulator, the CSA, will shortly advertise three new pay-TV and two new free-to-air HD slots on its DTT platform. Meanwhile, France Ô, the public service channel targeted at viewers from the country’s overseas territories, will be rolled out nationally in the coming weeks.

The decisions result from a public consultation triggered by two pay-DTT channels, AB1 and Canal J, handing back their licences last year.

The new services will launch next year, and will be spread across the six existing multiplexes (R1-R6) as well as two new ones, R7 and R8, which will be opened up as a result of analogue television being switched off region-by-region between now and the end of 2011.

Farncombe’s interpretation of today’s CSA announcement is that the new DTT multiplex configuration will be as in the table below:

R1	R2	R3	R4
France 2	i>télé	Canal+ HD	M6
France 3	BFM TV	C+ Cinéma	W9
Local/ France 3	Direct 8	C+ Sport	Paris 1ère
France 5	Gulli	Planète	NT1
France Ô	Europe 2 TV	TPS Star	Arte HD
LCP	France 24	New pay-TV slot TBA
R5	R6	R7	R8
France 2 HD	TF1	New pay-TV slot TBA	Gifted channel to TF1 TBA
TF1 HD	LCI	New pay-TV slot TBA	Gifted channel to M6 TBA
M6 HD	Eurosport	New FTA HD slot TBA	Gifted channel to Canal+ TBA
	TMC	New FTA HD slot TBA	Other channels TBA
	NRJ12
	TF6
	Arte

Source: CSA, Farncombe analysis (Note: Pay-DTT channels in italics, HD channels in bold)

The allocation of three new pay-DTT channels is designed to boost the attractiveness of pay-TV on the French DTT platform, which has so far performed poorly.Meanwhile, the creation of new free-to-air HD channels should make it easier for the DTT platform to compete with satellite and cable, which both enjoy superior bandwidth and much larger HD offers.

French rules which mandate the inclusion of HD DTT tuners in TV sets already favour the platform. With 46.1% of French homes owning an HD-compatible TV display at the end of 2009, the new services should be able to benefit from a mature addressable market.

After choosing the Japanese ISDB-T standard for their digital terrestrial TV (DTT) system, the Brazilian authorities have invested much money and diplomatic effort in spreading the Brazilian variant ISDB-Tb and the Ginga middleware to other countries. They were partially successful: Ecuador has recently announced it will adopt ISDB-Tb, after Argentina, Chile, Peru and Venezuela. A few African countries, including South Africa, are reconsidering their previous inclination to adopt the European DVB-T standard.

However, political will is not enough to convince Brazilians it is worth buying a set-top box to watch DTT. Despite tax incentives, quotas on TVs, incentives for mobile TV handsets and intensive marketing, Brazilians continue to be confused about what ‘DTT’ means.

Farncombe recently visited several large electronics stores in Brazil, and despite the availability of integrated DTT TV sets for sale, the vast majority of salesmen confused DTT with high definition or with digital pay-TV (pay-TV operators use the European DVB standard).

Three years after launch, Farncombe estimates that less than 2% of households view DTT services, and most DTT tuner sales are “accidental”, as they are integrated into large TV sets (in which DTT tuners are mandated), mobile and portable devices.

Farncombe believes that the key reasons for the challenges faced by Brazilian DTT are:

• Lack of exclusive DTT content: DTT services are HD versions of analogue TV ones and most cities with DTT coverage only receive the top one or two broadcasters.
• Competition from pay-TV services: the launch of new DTH operators has decreased the pay-TV entry price and driven a 20% increase in the number of pay-TV subscribers in the last 12 months. In addition, the focus on HD as DTT’s differentiator makes DTT attractive only to HD-set-owning higher-income households, which are more likely to subscribe to pay-TV.

In spite of the slow adoption of fixed DTT in Brazil, mobile operators have launched several handset models with integrated DTT tuners and broadcasters are investing in in-fillers to improve DTT mobile reception. Meanwhile, other countries have learnt from the Brazilian experience and are allowing multichannel DTT and subsidising decoders to create an initial viewing base for DTT services.

Farncombe’s experience advising broadcasters and governments planning their transition to DTT has taught us that careful planning to ensure the platform’s attractiveness to viewers is more important than the choice of transmission standard (ISDB-T, ISDB-Tb, DVB-T or DVB-T2), which can have very similar end-user functionality depending on the network configuration. Technical specifications that are not mandated and officially certified are often ignored by most vendors, and the high degree of fragmentation of the receivers’ base makes it commercially unfeasible to offer advanced TV services.

To know more about Farncombe’s experience in DTT transition please contact us at strategy@ftl.co.uk

BSkyB’s sales-house, Sky Media, has decided to end ‘red-button’ advertising after nine years.  Sky is one of the best-known pay-TV operators offering this application, according to which viewers press the red button on their Sky remote control during a commercial spot to gain extra information about the advertised product, or to receive a brochure or sample in return for entering their details. At its peak in 2006, 160 such campaigns were running on the red-button service.

However, the service was always clunky – particularly when trying to enter personal details via the remote control – and the advent of green-button ‘bookable’ advertising, which allows viewers easily to watch and access long-form ads recorded on their PVRs or in parallel broadcast streams, has rendered the old service obsolete.

While hybridisation of Sky’s HD platform with broadband might have rescued red-button advertising by increasing its functionality and sophistication, comments made last week by Sky confirm that the priority is to use the IP connectivity of its installed HD base to launch a ‘true’ VOD service (‘Anytime+’) later this year.

Sky’s next generation of advertising technology will instead exploit the partitioned hard drive incorporated into later models of the Sky+ box to deliver targeted ad substitution, along the lines of the Sky AdSmart technology currently embedded in its online Sky Player product. This ‘push’-based targeting is unlikely to be very granular, perhaps only addressing homes by zone or region.

It will be interesting to see how Anytime+ integrates this model when it surfaces this year. Because of the quality mis-match between ads delivered over the air and over-the-top video, targeted advertising on VOD pre-roll ads is more likely to be inserted at source. But whether BSkyB’s aim is to make such ads more tightly personalised remains unclear.

Some rare insights into how VOD and electronic sell-through (EST) revenues benefit from a ‘day-and-date’ (D&D) DVD release environment have been afforded by Warner Bros.In the opening keynote at the Screen Digest PEVE Digital Entertainment conference in London, Jim Wuthrich, president of International Home Video and Digital at Warner Brothers Home Entertainment, revealed that the studio’s top VOD title last year was Gran Torino, which bought in $60m from on-demand and EST against a total box office take of $148m.

Two years ago, Warner began releasing its films on Blu-ray Disc, DVD, VOD and EST on the same day. At the time, it said that  margins from D&D VOD were between 60-70%, compared with 20-30% for optical discs, and that controlled  trials of D&D showed practically no effect on DVD  sales.   

The studio is now forecasting that global digital spend (i.e. VOD plus EST) will grow by 19% in 2010 to reach $2.5bn, with EST accounting for $900m of the total.

The Warner experience shows that studios are gradually becoming more comfortable with the digital rental and sell-through of movies. This is part of a wider phenomenon to do with the overall shrinking of video release windows.

D&D release also helps to reduce the incentive for piracy. Given digital’s higher margins and a possible reduction in piracy losses, any resulting drop in Warner’s physical media sell-through and rental business caused by collapsing the windows may be worth putting up with.